Copyright Owner Out-Hustles Flynt

When Ohio newscaster Catherine Bosley (aka Catherine Balsley) entered a wet t-shirt contest and danced nude at a bar while on vacation in Florida in March 2003, she didn’t realize that an amateur photographer was taking photographs of her.  Bosley lost her job as a news anchor when the amateur photographer posted photos of Bosley on the photographer’s website.  Bosley and her husband acquired all rights to the photos from the photographer and registered the copyrights with the Copyright Office in August 2004.

LFP, Inc. (aka Larry Flynt Publications) publishes Hustler magazine, which “contains graphic images and stories about sex.”  “Hot News Babes” is a recurring item in the magazine.  A Hustler reader nominated Bosley as a “hot news babe” in August 2005.  The reader did not provide Hustler with photos of Bosley, but told Hustler that it could find photos on the Internet.  One of the photos Hustler obtained online was a photo for which Bosley and her husband owned the copyright.  The photo included a visual copyright notice.  Hustler’s editors knew that the photo was copyrighted, but published the photo in the February 2006 edition without locating the copyright owner and without obtaining a license.  Hustler’s attorney advised Hustler that it could publish the photo as a fair use.  Bosley found out about the publication and filed suit against LFP for copyright infringement and other claims in February 2008.

Direct copyright infringement was the only claim that went to trial.  The jury awarded $135,000 in damages to Bosley.  The district court awarded $133,812.51 in attorney’s fees to Bosley as the prevailing party.  LFP appealed the district court’s denial of its motion for judgment as a matter of law, its motion for a new trial and its motion for attorney’s fees.  The Sixth Circuit Court of Appeals affirmed the district court’s orders.

Fair Use.  LFP admitted that Bosley owned a valid copyright and that it copied Bosley’s copyrighted photo without permission, but claimed that it was not liable for copyright infringement because its use was a fair use.  17 U.S.C. §107 provides that fair use does not infringe copyright.  The statutory fair use factors are:

  1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
  2. the nature of the copyrighted work;
  3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
  4. the effect of the use upon the potential market for or value of the copyrighted work.

            Purpose and character of the use.  Under this factor, the court examines whether the new work is “transformative” and whether the use of the new work is commercial or noncommercial.  A “transformative” work does not supplant the original, but adds something new, such as a new expression, meaning or message. 

LFP’s use of Bosley’s photo was for commercial purposes, not for noncommercial, educational purposes.  The photo and the story behind it were 3 years old at the time of publication and were not newsworthy.  LFP’s use of the photo was also not transformative.  Hustler simply reprinted the photo and did not add new meaning to it.

            Nature of the copyrighted work.  The court examined whether the copyrighted work was factual or creative.  The theory is that factual works should be disseminated more widely that creative works, such as fiction.  The court ruled that the Bosley photo exhibits a mixture of fact and creativity.  The jury reasonably could have weighed this factor in Bosley’s favor.

            The amount and substantiality of the use.  LFP used the entire photo.  “While wholesale copying does not preclude fair use per se, copying an entire work militates against a finding of fair use.”  (Opinion pdf page 11).

            Effect of the use on the potential market.  The court held that Bosley’s intent to exploit her copyrighted works is irrelevant.  The issue under the statute is “whether there is potential for an adverse effect on the market for the photograph should the challenged use become widespread.”  Bosley presented evidence of the market for the photo and argued that LFP’s use directly competed for market share for the photo.  LFP “failed to rebut the presumption that its publication of the Bosley photograph affected the market.” 

Actual damages17 U.S.C. §504(b) is the applicable statute:

The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages.  In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.

The court indicated that the phrase “attributable to” in the actual damages statute leads to some confusion in interpreting the statute.

The phrase “attributable to” appears twice in the statute:  First, the statute provides that a copyright owner is ‘entitled’ to recover only those profits that are ‘attributable to’ the infringement of its copyrighted material.  The final sentence of the statute explains that the burden of proving which portions of that gross revenue are ‘attributable to’ or not attributable to the infringement is on the infringer – not the copyright owner.

(Opinion pdf page 24).

Bosley’s only requirement was to prove LFP’s gross revenue.  The gross revenue number set forth by the plaintiff must have a reasonable relationship to the infringing activity.  Bosley met those requirements because LFP admitted that its gross revenue from the February 2006 issue of Hustler in which Bosley’s photo appeared was $1,148,000.  LFP argued that none of its gross revenue was attributable to Bosley’s photo.  Bosley argued that $265,000 in profits were attributable to her photo.  The jury awarded profits of $135,000 to Bosley, which amounts to 8.5% of LFP’s revenues for the sale of that issue.  Bosley met her burden under the statute.  The jury verdict was not excessive, so there was no basis to disregard it.

Owners of copyrights that are infringed after the work is registered have the option of recovering actual damages under §504(b) or statutory damages under §504(c).  Statutory damages range from $750 to $30,000 per work infringed, or up to $150,000 per work infringed if the infringement is willful.  Bosley opted to recover actual damages and did not seek statutory damages.  The jury in Bosley’s case found that LFP’s infringement was not willful.  Had Bosley opted for statutory damages, her recovery on the infringement claim would have been limited to $30,000.

Prevailing party.  Both parties claimed to be the prevailing party – Bosley, because she prevailed on the one issue that was actually tried, and LFP, because it succeeded in getting several of Bosley’s state law claims dismissed.  The district court awarded Bosley attorney’s fees of $112,509, which was 40% of Bosley’s total fees, plus $21,303.51 in costs.  The factors for awarding fees in copyright cases are frivolousness, motivation, objective unreasonableness, and the need in particular circumstances to advance considerations of compensation and deterrence.  LFP did not properly allege that the district court abused its discretion, so the Sixth Circuit affirmed the award under the Copyright Act. 

Regarding Bosley’s state law claims that were dismissed, LFP did not show that it was entitled to attorney’s fees under the state statutes.  The award of attorney’s fees under the Copyright Act does not extend to unrelated state law claims.  In addition, the party claiming attorney’s fees under the Copyright Act must prevail on at least one copyright issue, which LFP did not do.  The Sixth Circuit affirmed the district court’s award of attorney’s fees and costs.

This case is Catherine Balsley v. LFP, Inc., No. 11-3445, 6th Circuit Court of Appeals.

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